Seafarms Group’s $1.5 billion flagship development Project Sea Dragon has entered voluntary administration after almost 10 years of capital raising and speculation about its viability, amid millions in NT taxpayer subsidies being spent on the project.

Seafarm’s (SFG) move to place the project into voluntary administration this week came after the Royal Institution of Chartered Surveyors determined that $13.9 million was owed by SFG following the suspension of work on the greenfield project in December 2021 and later termination of contracts in April 2022.

The aquaculture giant also requested that ASX suspend trading of its shares immediately since it would be “prejudicial” to an efficient administration process to continue trading. The voluntary administration is expected to end on April 17.

In a statement to the ASX yesterday, it said that with Project Sea Dragon relying on SFG for its funding, the board resolved that it was no longer in the best interests of the company to continue to fund the development.

The project was once touted by the NT Labor Government as a key plank to grow the NT’s economy to $40 billion by 2030.

The NT Government spent $56 million on the project, including $32.2 million to upgrade Gunn Point Road to a two-lane sealed standard to the entrance of the project site, $7 million to provide an access road to the Point Ceylon, Bynoe Harbour site, and $17.5 million to upgrade the Keep River Plains Road to ensure year-round access between Kununurra and Legune Station.

While being regarded as among the biggest and most esteemed prawn farming companies in the country, Seafarms was rumoured to be seeking a buyer for the entirety or parts of the business last year.

In June last year, SFG posted a net loss of $75 million, brought about by uncertainties over Project Sea Dragon, which was forecasted to be capable of producing a maximum of 180,000 tonnes of black tiger prawns yearly.

The project, supported by the Territory and West Australian governments, was to be a staged development totalling 10,000 hectares of ponds for prawn production that will be supported by facilities across the Territory.

SFG chief executive officer Rod Dyer said they are “extremely disappointed” with the decision, having only provisioned $8.7 million for the dispute’s settlement.

Mr Dyer said Seafarms can cover the difference, but added he felt that the determination was excessive and that the group is considering its options including legal redress.

In the fiscal year 2021-2022, Project Sea Dragon incurred a huge $85.4 million loss, raising viability issues with the project. The loss is more than three times the $25.7 million loss the company posted for the financial year 2020-2021.

The project had been placed on hold following a different internal report in March last year that found it would not generate “acceptable” financial returns and involved too much “unacceptable risk” to continue.

A large percentage of work on the project was already made under the company’s former CEO Mick McMahon who resigned after just seven months on the job.

Mr McMahon’s recommendation to stop the project due to non-viability, however, ran in conflict with major shareholder Ian Trahar who controls 28 per cent of the stock, who called an extraordinary general meeting to have Mr McMahon removed. The move followed the resignation of the company’s chief financial officer Ian Brannan.

Seafarms had previously attracted more than $100 million in government spending to build roadways to support the project after it planned to devote $1.1 billion to build the biggest prawn breeding farm in the world, located at the Legune Station, 340km southwest of Darwin.